A structured settlement is designed to compensate individuals following the outcome of a civil lawsuit. For example, if you were involved in a car accident and were seriously injured, you may choose to sue the driver who was responsible. If the court finds in your favor, you may be awarded compensation.
Full Answer
What are structured settlements?
Structured settlements are a stream of tax-free payments issued to an injured victim. The settlement payments are intended to pay for damages or injuries, providing financial security over time. Structured settlement payments are guaranteed by the insurance company that issued the annuity.
How can I cash in my structured settlement payments?
You can “cash in” your future structured settlement payments by selling them to a factoring company at a discount if you need immediate cash. Most structured settlements stem from personal injury, wrongful death or workers’ compensation lawsuits. Structured settlements are a stream of tax-free payments issued to an injured victim.
What are the different types of legal settlements?
Legal settlements can be paid out in a one-time lump sum or through a structured settlement where periodic payments are made through a financial product known as an annuity. The key differences between these settlement options are in the areas of long-term financial security and taxes.
What are the pros and cons of a structured settlement?
Structured Settlement Pros and Cons 1 Payments are tax-free. 2 In the event of the recipient’s death, the beneficiary can continue to receive tax-free payments. 3 Payments can be scheduled for almost any length of time and can begin immediately or be deferred for as many years as requested. ... More items...
What is an example of a structured settlement?
Examples of cases that may result in structured settlements include personal injury, workers' compensation, medical malpractice and wrongful death.
What is considered a structured settlement?
Allowed by the US Congress since 1982, a structured settlement is: A completely voluntary agreement between the injured victim and the defendant. Under a structured settlement, an injured victim doesn't receive compensation for his or her injuries in one lump sum.
What are structured settlement companies?
Structured settlement purchasing companies, also known as factoring companies, serve those selling their structured settlement payments. These companies offer settlement owners lump sums of cash in exchange for the rights to future payments or portions of future payments.
How do I find my structured settlement?
If you've lost the original settlement documents related to your structured settlement payments, you may be able to get copies of the documents from the annuity issuer that is making structured settlement payments to you, or its related qualified assignment company.
What is the purpose of a structured settlement?
A structured settlement is a regular stream of tax-free payments granted to the plaintiff in a civil lawsuit. Structured settlements are meant to provide long-term financial security to the injured party. If the amount of money is small enough, the wronged party may have the option to receive a lump sum settlement.
How are structured settlements paid out?
When the defendant and the plaintiff in a lawsuit agree to settle a claim with a structured settlement, the parties negotiate a cash amount payable by the defendant in exchange for the plaintiff dropping the lawsuit. The money is distributed as a series of periodic payments, typically funded through an annuity.
Who will buy my structured settlement?
Companies that Buy Structured SettlementAnnuityFreedom.net. (877) 547-3672. ... JG Wentworth. Website: jgwentworth.com. ... Annuity.org. Website: annuity.org. ... DRB Capital.org. Telephone: (888) 981-8703. ... Fairfield Funding. Telephone: 855-296-0985. ... Novation Settlement Solutions. Telephone: (888) 797-3740. ... RSL Funding. ... Seneca One.More items...•
Who owns a structured settlement agreement?
A settlement agreement establishing the structured settlement will typically expressly state that the assignment company has all rights of ownership of the annuity. The structured settlement payee only owns the right to receive payments. The payee does not own the structured settlement annuity.
Is structured settlement a debt collector?
Who is Structured Settlement? Structured Settlement is a third-party debt collector that is currently based out of Henderson, Nevada. They also go by the name Nationwide Capital Services, LLC.
Do you have to pay taxes on structured settlement?
Under a structured settlement, all future payments are completely free from: Federal and state income taxes; Taxes on interest, dividends and capital gains; and. The Alternative Minimum Tax (AMT).
Should I take a lump sum or structured settlement?
You should take a lump sum settlement for all small settlements and most medium-sized settlements (less than $150,000 or so). But if you are settling a larger case, there are two good reasons for doing a structured settlement. First, the structure guarantees that you won't spend the money too fast.
What to do with a $100000 settlement?
What to Do with a $100,000 Settlement?Sort Out Tax Implications.Find a Financial Advisor.Pay Off the Debts.Invest in a Retirement Home.Start a Business or Help Friends and Family.Donate the Money to the Needy.Final Words.
What is better a lump sum or structured settlement?
Structured settlements can save you on taxes versus a lump sum, and for many people work as a form of income or annuity every year. Structured settlements can work in many instances. But they may be less than advantageous in others.
Do I have to pay taxes on a structured settlement?
Structured settlement annuities are not taxable — they're completely tax-exempt. It's a common question that we are asked by personal injury attorneys, and in certain situations, the tax-exempt nature of structured settlement annuities results in significant tax savings to the client.
Is a structured settlement the same as an annuity?
Structured settlements are awarded to plaintiffs in court cases. Annuities can be purchased by individuals. Annuity sales don't require court approval if you purchased or inherited the annuity. It's often faster to sell annuity payments than structured settlement payments.
Are Structured Settlements a good idea?
The best reason to support structured settlements is to have payouts of income to last throughout the beneficiary's lifetime. With guaranteed payments, there is less chance of losing principal to poor investments, spendthrift habits or the undue influence of family and friends.
What is a structured settlement and how does it work?
Structured settlements are periodic payments made to a plaintiff who wins or settles a personal injury lawsuit. Instead of receiving a lump sum of...
Where can you sell your structured settlement payments?
You can sell your structured settlement payments to a reputable factoring company, otherwise known as a purchasing company. It is important to do y...
What is the difference between a structured settlement and an annuity?
A structured settlement follows a court process, and it is a stream of payments determined through negotiations between a plaintiff and a defendant...
How much does it cost to sell a structured settlement?
Selling a structured settlement is not a dollar-for-dollar exchange. The purchasing company will charge a discount rate, which typically ranges bet...
1. Wrongful Death
Ken Johnson was driving with his beloved wife, Jen, when a drunk driver hit their vehicle at a high speed. While Ken miraculously remained unharmed, Jen tragically lost her life upon impact.
2. Medical Malpractice
Sarah Swanson was receiving medical treatment for a serious kidney condition and her doctor ultimately determined that her unhealthy kidney needed to be surgically removed.
3. Car Accident
Jordan Jackson was driving to work when another driver, distracted and on her cell phone, collided head-on with Jordan’s vehicle. As a result of the other driver’s negligence, Jordan was severely injured. After multiple surgeries and sky-high medical bills, Jordan still had a long road of recovery ahead and was unable to work.
4. Slip and Fall Accident
Amanda Benson was grocery shopping one morning when she failed to notice a spilled jug of water on the floor. The grocery store staff was alerted of the spill but still hadn’t gotten around to cleaning it up. Because of their negligence and failure to take care of the wet floor, it posed a serious hazard to customers, including Amanda.
5. Product Liability
Morgan Anderson was excited about his new car purchase. He was a safe driver and always abided by the rules of the road. In fact, it was the car’s safety features that appealed to him most when he made his vehicle selection. Everything was fine for a few years, but what he didn’t realize was that his car was defective.
Contact DRB Capital to Get Started
Do you have questions about the structured settlement examples outlined above? Do you have a similar case or lawsuit, and would like more information about selling structured settlement payments for a lump sum of cash? Contact us today by giving us a call at 877-894-4541 .
Why Choose a Structured Settlement Instead of a Lump Sum?
At first glance, some people may think that the choice is obvious when it comes to personal injury settlements: get all the money you’re owed as quickly as possible in a lump sum. But there are some strategic reasons why you might consider negotiating for a structured settlement rather than a one-time payout.
How Structured Settlements Work in Arizona
Settlements are generally reached by a plaintiff and defendant outside of court to avoid a lengthy trial.
Get Help With Your Personal Injury Settlement
Whether you choose a structured settlement or a lump sum payment, personal injury settlements are generally considered final once you sign the agreement. In order to get the highest amount of compensation, you need an attorney who will fight for your rights and negotiate the most favorable outcome.
How Do Structured Settlements Work?
Legal settlements can be paid out in a one-time lump sum or through a structured settlement where periodic payments are made through a financial product known as an annuity. The key differences between these settlement options are in the areas of long-term financial security and taxes.
What happens when a plaintiff receives a lump sum settlement?
When a plaintiff receives a settlement through a one-time lump sum, they might spend it too quickly, robbing them of the long-term financial security that future payments could provide. Moreover, any interest and dividends earned if the lump-sum were to be invested would be subject to taxes.
How are legal settlements paid?
Legal settlements can be paid out in a one-time lump sum or through a structured settlement where periodic payments are made through a financial product known as an annuity. The key differences between these settlement options are in the areas of long-term financial security and taxes. When a plaintiff receives a settlement through ...
Why is structured settlement more than lump sum?
A structured settlement often yields, in total, more than a lump-sum payout would because of the interest your annuity may earn over time.
What are the pros and cons of structured settlement?
Structured Settlement Pros and Cons 1 Payments are tax-free. 2 In the event of the recipient’s death, the beneficiary can continue to receive tax-free payments. 3 Payments can be scheduled for almost any length of time and can begin immediately or be deferred for as many years as requested. They can include future lump-sum payouts or benefit increases. 4 Spreading out payments over time can reduce the temptation to make large, extravagant purchases and guarantees future income. This is especially helpful if the recipient has a medical condition that will require long-term care. 5 Unlike stocks, bonds and mutual funds, structured settlements do not fluctuate with market changes. Payments are guaranteed by the insurance company that issued the annuity. 6 A structured settlement often yields, in total, more than a lump-sum payout would because of the interest your annuity may earn over time.
What is the role of a judge in an annuity sale?
The role of the judge is to decide if the sale is in the best interest of the annuity owner. Other rules may apply depending on the details of your annuity contract and the laws of the state where you live. The Structured Settlement Protection Act of 2002 provides federal guidelines on such transactions.
What was the purpose of the National Structured Settlements Trade Association?
By 1985, the National Structured Settlements Trade Association formed to preserve and promote structured settlements to injury claimants through education and advocacy.
What is a settlement in a car accident?
A settlement typically includes a lump-sum of cash upfront (cash advance), one time, to cover immediate expenses, followed by guaranteed periodic payments, tax-free, customized to meet the needs of the settlement winner. You should think in terms of winning a personal injury lawsuit due to a car crash. An annuity settlement is negotiated between ...
Why Do I Need a Structured Settlement?
Structured settlement annuities can fulfill needs created from original accident or death. Those needs include:
What is structured settlement annuity?
Structured settlement annuities are similar to either an immediate annuity or deferred annuity. The structured settlement payments are guaranteed and irrevocable; however, the annuity settlement options can differ from typical income contracts. In a structured settlement payout, the payments may increase or decrease down the road multiple times.
How is an annuity settlement distributed?
The settlement is then distributed in a series of periodic payments over an agreed amount of time rather than a lump sum payment in most cases.
When did structured annuities start?
The structured annuity came about in 1983 after the Periodic Payment Settlement Act of 1982 was established.
How does the state divide assets?
Each state divides assets in either an equitable division or community property approach. If the state utilizes the equitable distribution method and the settlement was obtained before marriage, the settlement probably will be kept with the settlement’s owner. However, if the state takes the community property route, the state can divide the settlement regardless of whether the settlement was received, whether before or during the marriage.
When did the Federal Periodic Payment Settlement Act become mandatory?
The Federal Periodic Payment Settlement Act of 1982 made it mandatory for court approval on all sales of structured settlements to ensure the consumer’s best interest is put first, and limit any sort of party from taking advantage of the settlement recipient.
Why do courts require structured settlements?
However, in cases that involve minor children or persons found to be incompetent, courts typically require structured settlements in order to ensure the award money is disbursed and spent appropriately.
When did structured settlements start?
Structured settlements were first popularized in Canada during the 1960s as a way of managing payouts from settlements involving thalidomide. German pharmaceutical company Grünenthal manufactured the drug to ease morning sickness for pregnant women, but the sedative caused severe, life-threatening birth defects in thousands of children.
What is a medical malpractice lawsuit?
Medical Malpractice: A special type of civil lawsuit may be filed when a medical professional harms a patient through an incorrect diagnosis, a flawed treatment or a failure in follow-up care.
Do thalidomide survivors need lump sum settlements?
Thalidomide survivors require specialized health care and help with activities of daily living, and it quickly became clear that lump-sum settlements were not ideal for covering the cost of these lifelong needs.
What is structured settlement?
If you’re unfamiliar with structured settlements, they’re awarded as installments over a long period of time , rather than a lump-sum settlement which is paid once, in-full. Today, we’re going to give you some common structured settlement examples so that you can get a better idea of who they’re for, why you might get one, and how they can actually benefit you more than a lump-sum.
When did workers compensation settlements become structured settlements?
Some workers’ compensation settlements, especially ones that result in a plaintiff being unable to return to work, are paid as structured settlements. In 1997, the US tax code was amended to promote the use of structured settlements in these cases.
What happens if you win a lawsuit?
In reality, the type of settlement you’re awarded will depend on your specific case. You might end up with a lump-sum settlement, a structured settlement, or if you’re fortunate, you’ll have the ability to choose between them.
